💼 QBI and the Big Beautiful Bill: What Changed—and What Didn’t

The Qualified Business Income (QBI) deduction, also known as the Section 199A deduction, has been a powerful tax-saving tool for small business owners, partnerships, S corporations, and sole proprietors since it was enacted under the Tax Cuts and Jobs Act (TCJA) in 2017.

With the passage of the Big Beautiful Bill (BBB) on July 4, 2025, many taxpayers were hoping for a full extension or expansion of QBI benefits. So, what actually happened? Let’s break it down.

✅ What Stayed the Same

The final version of the BBB:

• Extended the QBI deduction for individual taxpayers through 2029.

• Maintained the 20% deduction on qualified business income for passthrough entities.

• Retained the existing income limits, phaseouts, and specified service trade or business (SSTB) rules.

• Did not expand eligibility or remove the existing thresholds.

This means business owners earning under the income caps can continue to deduct up to 20% of their qualified income, reducing their effective federal tax rate.

🛑 What Was Proposed but Didn’t Pass

In earlier drafts of the BBB, several significant QBI reforms were on the table—but they were ultimately left out of the final law:

1. Repealing the SSTB RestrictionsOriginally, there was momentum to eliminate the "specified service trade or business" rule, which limits or disallows the deduction for doctors, lawyers, consultants, and others over certain income thresholds.➤ Didn’t pass: SSTB limitations remain in place.

2. Making QBI PermanentOne version of the bill proposed making the QBI deduction a permanent feature of the tax code.➤ Didn’t pass: QBI still sunsets after 2029 unless extended again.

3. Increasing the Deduction RateSome lawmakers floated increasing the deduction to 25% or more for certain industries or income brackets.➤ Didn’t pass: The deduction remains capped at 20%.

4. Expanding Eligibility to C CorporationsThere were proposals to create a similar deduction or reduced rate for small C corporations.➤ Didn’t pass: The deduction remains exclusive to passthrough entities and sole proprietors.

💡 Planning Tip for Taxpayers

If you're a passthrough business owner, this extension through 2029 offers stability—but the rules are still complex. Keep in mind:

• High earners in service businesses may still be limited or excluded from the deduction.

• Aggregation rules and W-2 wage/property thresholds continue to apply.

• The QBI deduction remains a below-the-line deduction (not an adjustment to income).

🧠 Final Thoughts

The BBB’s final treatment of the QBI deduction can be summed up as: "status quo—extended, not expanded."While the business community was hoping for simplification or broader access, the core 20% deduction lives on—for now. With the sunset date still looming in 2029, the tax planning window is open, but not forever.